International Business Case: An Extreme Counter Offer
Dr. Ling, SingCast Cable's V.P. of Products, was in full control of the meeting. He sensed it was time to push for more concessions from CyberWave's negotiating team. CyberWave, the four year incumbent e-mail platform provider, had been very uncooperative in renegotiating the current contract. But with eWeb's (a Singapore start-up company) competitive offer on the table, Dr. Ling had a real opportunity to significantly cut his growing e-mail operational costs.
Dr. Ling looked directly at Mr. Hua, CyberWave's Sales Director, and stated in a quiet, gentle tone "Mr. Hua, we cannot afford any longer to supplement CyberWave's licensing fees ...view middle of the document...
For all he knew, CyberWave might just be desperate enough to agree.
Dr. Ling continued, "Mr. Hua, I am sure you are aware that a new vendor has emerged -- eWeb. They have crafted a very creative business proposition that many within our company view as a long-term business commitment. Obviously I am not at liberty to provide you with the details of their proposal, but I would encourage you to be very creative and aggressive with your business model. We are looking to award this contract for a three year term."
Dr.Ling was not sure how is subtle threat would be received. He liked CyberWave's technology and their ingenuity, but he thought that they were starting to take his business for granted.
He continued, "CyberWave and SingCast have had a good business relationship over the last four years. But as discussed in our last meeting, SingCast feels that your company has not been proactive enough in finding a business model to lower our total cost of ownership. If you value our business, now is the time to demonstrate your commitment."
Patrick Wilson, the American and Mr. Hua's manager, could not believe what he was hearing. Patrick could not remember the last time he heard such an "extreme" opening position for a contract re-negotiation with a customer. Threats, massive price concessions, and a competitive RFP was a lot to digest. It took all of his mental strength to refrain from interrupting, but today he was going to take his cues from Mr. Hua. Since Mr. Hua remained stone faced, he did the same. This was Patrick's second trip to Singapore. After twelve years of selling globally, he knew better than to let his "American emotion" take control of his tongue. Instead of talking, he decided to write Dr. Ling's points down on his note pad. He wrote:
1. Charge nothing for any new subscriber that does not sign up for a "for fee" account
* Reaction - Ridiculous! We have no control of "how" SingCast charges for their packages. Whether they charge or not, a subscriber is using our software, we need to get paid.
2. Outsource entire e-mail operations
*Reaction - Could be a great opportunity to generate new fees and leverage services from a 3rd party outsourced sub-contractor
3. Outsourcing costs would have to include: hardware and software costs, monthly telecommunications bandwidth costs, and all costs associated with the migration of the consumer accounts
* Reaction - Need more fact finding. A model like this has revenue potential, but many risks (we could financially lose our shirts). Not sure how we would account for and control bandwidth costs
4. eWeb is the competitive vendor - Is Dr. Ling threatening us?
* Reaction - Very scary! The CEO, James Li, is an ex-CyberWave VP of Engineering. James was with the company for three years and was responsible for the e-mail solution product development. He took three of the best developers with him to...